DrumBeat: August 7, 2008

As world oil production has never peaked before, there is no historical basis for making informed judgments as to what is going to happen.

All we know is that some six billion people, living in some 200 economies on this earth are soon going to be confronted with getting by on less than the 86 million barrels of oil per day (b/d) that we currently consume. The outcome of the interaction among all those people, all those countries and all that oil is too complex to foresee with any clarity.

It has long been recognized among those studying the peak oil phenomenon a severe, lengthy, worldwide economic setback could reduce the demand for oil to such an extent that peak production could be lost in the chaos.

Other scenarios involve oil prices rising to such level that demand drops significantly, which would be followed by a major drop in prices, followed by increased demand and rising prices, and the cycle continues.

(Bloomberg) -- BP Plc and partners are likely to stop crude oil exports from a Turkish port tomorrow because of an explosion at a pipeline from Azerbaijan which may take weeks to repair, officials at Turkey's pipeline operator said.

NEW YORK (CNNMoney.com) -- The U.S. Environmental Protection Agency announced Thursday it will not curtail a rule requiring that ethanol be added to gasoline, turning back criticism that the additive was artificially raising food prices.

(Bloomberg) -- State-owned energy company PetroEcuador and Ivanhoe Energy Inc., a Canadian oil and natural-gas producer, will sign an oil production deal this month, PetroEcuador's head of production said.

(Bloomberg) -- Abu Dhabi, the largest sheikhdom in the United Arab Emirates and owner of the world's fifth-biggest oil reserves, will spend $20 billion to raise crude production by 30 percent in the next two years.

``Forecasts of strong global demand for oil in the long run coupled with diminishing supplies has prompted the emirate to allocate investments of up to $20 billion to raise its oil production capacity to 3.5 million barrels a day by 2010, up from 2.7 million barrels a day at present,'' the Abu Dhabi Department of Planning and Economy said in an e-mailed report today.

WASHINGTON -- Utility shut-offs for customers behind on their energy bills are increasing around the country, reaching 50% or more in some hard-hit areas, as the effects of rising prices and a sagging economy are beginning to drag down more vulnerable consumers.

Agencies that provide financial assistance for energy costs report long waiting lists and significant jumps in first-time applicants. With the prospect of much more serious trouble this winter, when bills traditionally are higher, Congress is exploring a significant increase in federal energy assistance as part of a second economic stimulus plan scheduled for consideration next month.

LONDON (Reuters) - OPEC oil exports, excluding Angola and Ecuador, will fall by 360,000 barrels per day (bpd) in the four weeks to Aug. 23, an analyst who tracks future flows said on Thursday.

Seaborne crude exports from 11 OPEC members, including Iraq, will fall to 24.46 million bpd from 24.82 million bpd in the four weeks to July 26, British consultancy Oil Movements said in its latest estimate.

The decline reflects lower shipments from Saudi Arabia and other Middle East countries and is in line with the normal seasonal pattern, the consultancy said. Sailings were at a peak for 2008 in its report three weeks ago.

Faced with declining production, Mexico has increased both the number of oil rigs in operation and its investment budget, benefitting firms that supply equipment to Petroleos Mexicanos, or Pemex, as the state oil firm struggles to make up for lost time.

A shortfall in exploration and production spending over the past decade has caught up with Pemex. Output is down 20% from peak production of 3.4 million barrels a day in 2004.

The Iraqi Oil Ministry topped other ministries in spending this year, investing some $1.04 billion during the first six months of 2008 to improve the oil sector, according to data published by the Iraqi planning ministry Thursday.

Although flush with cash due to high oil prices and hard-pressed to increase production, major oil companies aren't ready to make large-scale acquisitions, at least not yet.

Industry watchers don't think the current political climate is conducive to consolidation, because oil companies fear becoming a target in a presidential campaign season that has increasingly spotlighted energy policy. The other, perhaps larger impediment is high oil and natural gas prices, which would make a takeover of the most likely targets prohibitively expensive.

Someplace between Kipling Street and the Mousetrap, somewhere between the driver's seat where Brian Scarborough sipped hazelnut coffee and the shotgun seat where Brian McCall slurped regular, at some mark on the radio dial between Rush Limbaugh and NPR, a commuting insurgency began.

The three people riding from Arvada to Greenwood Village in Scarborough's BMW station wagon concluded they had become committed carpoolers, rather than random employees thrown together by $4 gas. One month into their experiment, and the three road warriors have gladly given up their American birthright to drive to the office alone.

Mitsubishi Motors Corp. will bring electric cars to the U.S. starting this fall in test programs announced today with Pacific Gas & Electric Co. and Southern California Edison.

The Japanese automaker will deliver fewer than a dozen of its tiny MiEV electric cars to the utilities, but the company said it plans to use the programs to determine whether the U.S. is a viable mass market for such vehicles.

The US power grid - three interconnected grids made up of 3,500 utilities serving 283 million people - still hangs together by a thread, and its dilapidated state is perhaps one of the greatest threats to homeland security, according to Bruce deGrazia, the president of Global Homeland Security Advisors and a former assistant deputy undersecretary for the Department of Defense, who spoke at an electricity industry conference in Shepherdstown, Va.

The slightest glitch on the transmission superhighway could upset the smooth distribution of electricity over thousands of miles of transmission lines and darken states from Ohio to New York in a matter of seconds, bringing hospitals and airports to a standstill.

The government is finalizing its emergency plan this week in order to ensure that the country is protected from foreign dangers in case the regional situation escalates and a war breaks out between Iran and the USA.

An unnamed senior official revealed that the government has learnt that two aircraft carriers are scheduled to arrive in the Gulf and the Red Sea in preparation for the expected war at any time. The official said that this information led the government to accelerate its emergency plan preparations, which include arrangements for protecting all sectors and vital installations.

LONDON/DUBAI • Middle Eastern gas supply cannot keep pace with the region's rapid expansion and fierce competition between industries could force some energy-intensive projects, such as aluminium, to be delayed or even shelved.

In their bid for cheap, captive power, several aluminium majors have plans to site new plants in the Middle East, which is fast becoming an important growth area for the metal used in transport, power and packaging.

But the region's fast expansion has forced them to vie for lower-than-expected gas and power supplies coupled with rapidly rising demand. Aluminium producers are competing for energy with the steel and petrochemicals sectors, and Asian customers are also willing to pay more for liquefied natural gas (LNG).

LIMA (Reuters) - Motorists like Jesus Llanos wait in impossibly long lines to fill their cars with natural gas, a cheap gasoline substitute that people are flocking to because of sky-high global fuel prices.

Though Peru has large gas reserves, it has few pipelines to transport it and only several dozen filling stations in Lima to sell it -- putting President Alan Garcia's government in an uncomfortable position of trying to administer a temporary shortage.

The rise in natural gas demand, combined with a drop in hydroelectric power following light rains, has been so sudden that the government says it may raise energy prices soon to compensate thermoelectric plants that will have to buy costlier diesel.

Imports of crude oil are an important component of energy used in the United States, accounting for about two-thirds of total U.S. crude oil supply in 2007. The United States increased its crude oil imports by 16 percent between 1998 and 2005, when we reached a peak average daily import level of 10.13 million barrels per day (MMbbl/d). U.S. crude oil imports have declined slightly in subsequent years (Figure 1), as has overall petroleum demand. Imports in 2008 for the five months ending in May are down by 3 percent from the same period in 2007. In fact, imports for the month of May 2008 alone were over six percent below May 2007.

One would tend to associate inflation rates of 10.4%, 15.1, 26.4% and 32.2% with India, Brazil, China and Pakistan, respectively. But these are figures for Saudi Arabia, Russia, Iran and Venezuela, respectively — four of the five largest oil exporters in the world. While oil-importing countries are yet to figure out appropriate measures to tackle, with the energy crisis figures suggesting that exporting nations are as clueless as importing ones.

I think that the main thing we can learn from the recent volatility in oil prices is not that the laws of supply and demand have been broken, or that they're a function of anything else, but mainly that demand for oil is very inelastic, and that relatively small increases in demand can result in very large increases in price.

TIJUANA – Gas station owners in Tijuana and Rosarito have agreed to restrict gasoline sales for external containers, hindering Americans looking to take lower-cost, government-subsidized fuel back to the United States.

The Hilton Plan seems to have it backward: Even under fairly conservative estimates we have the ability to develop more fuel-efficient technology before we can access all the oil that’s offshore.

But it also looks like, even with such technology, the United States would still need to be importing significant amounts of oil from abroad in the coming decades. If we really wanted to get ourselves off the sauce, we’d need to combine these technological improvements with developing walkable communities and extending public transit.

While the current energy crisis is painful, the solution is not price caps or profit penalties. Rather, if we give entrepreneurs the opportunity to make money by finding creative ways to extract oil from exotic places or invent viable long-lasting batteries for electric cars, they will tap the capital markets and get after a solution. In the meantime, as consumers, we need to adapt.

Besides being caught in a cyclical downturn brought on by the subprime lending crisis, the U.S. auto industry is going through a secular transformation caused by the spike in oil prices. Goodbye, high-profit pickups and SUVs; hello, breakeven (or worse) small cars.

All of the old Big Three are suffering, but none like Chrysler. Chrysler has invested less than either Ford or GM in small cars and alternative fuels, and has no significant international operations to provide some relief.

South Africa's giant mining companies were badly hit by a strike yesterday over rising power, food and fuel prices that threatened to bring the continent's biggest economy to a standstill.

As global mining leaders such as Anglo Platinum, the world's top producer of the precious metal, counted their losses, powerful unions prepared for marches across the country.

Mines, refineries, car makers, textile factories, businesses and construction of stadiums meant for the 2010 Soccer World Cup could all be affected. Workers and students stayed at home after public transport was disrupted.

The need for a criminal inquiry into the Crandall Canyon mine disaster is shockingly clear now that investigators have detailed how greedy mine operators concealed danger warnings and literally chiseled underground pillar supports to the breaking point. The roof of the Utah mine collapsed last summer, killing six miners and leading three would-be rescuers to their deaths.

"Relax, there's enough oil for the coming decades. Stop producing ethanol, which is using up agricultural materials and has raised the price of food worldwide."

This is the view of Robert Mabro, the honorary president of the Oxford Energy Seminar, which is directed by the Kuwaiti expert Nader Sultan and which hosted the Saudi Aramco CEO, Abdullah Jumah, Shell chief executive, Jeroen van der Veer, Petrobras president, Sergio Gabrielli, and the chairman of the International Energy Agency, Nobuo Tanaka.

Passing even more of private energy costs in Alaska to state government is a policy fraught with long-term peril, but since the current emergency has made action inevitable, the Legislature should adopt a simple, limited program with a clear expiration date.

The program that best fits those criteria would pay only for the cost of heating oil above a particular price. The payments would not go to individual Alaskans but to oil distributors, which already keep the necessary records. The dealers would charge customers a set price, say $2.50 per gallon, and collect the rest of the market price from the state.

A Barack Obama ad ready to air at Florida gas stations that have pumps topped with TV screens was nixed at the last minute because the advertising company's chief said it reflected poorly on the oil industry, according to the presidential candidate's campaign.

In the past we experienced the consequences of pollution at the local or regional level, which allowed us to recognize when we had a problem and take needed action. We are now in a new era in which humankind's collective actions are, for the first time, capable of altering the global environment. This is a frightening realization. Fortunately, we have a small window of opportunity within which to act to minimize the extent of climate change and ocean acidification. The question is whether we will have the wisdom and the will to act now.

Industry, including the production of plastics, fertilizers, steel, cement, and paper, accounts for more than 30 percent of world energy consumption. The petrochemical industry, which produces plastics, fertilizers, and detergents, is the biggest consumer of energy in the manufacturing sector, accounting for about a third of worldwide industrial energy use. Since a large part of industry fossil fuel use is for feedstock to manufacture plastics and other materials, increased recycling can reduce feedstock needs. Worldwide, increasing recycling rates and moving to the most efficient manufacturing systems in use today could reduce energy use in the petrochemical industry by 32 percent.

The big challenge in cities everywhere is to recycle the many components of garbage, since recycling uses only a fraction of the energy of producing the same items from virgin raw materials. Virtually all paper products can now be recycled. So too can glass, most plastics, aluminum, and other materials from buildings being torn down. Advanced industrial economies with stable populations, such as those in Europe and Japan, can rely primarily on the stock of materials already in the economy rather than using virgin raw materials. Metals such as steel and aluminum can be used and reused indefinitely.

New Federal data showing further steep declines in the number of miles Americans are driving is additional proof that the country needs new means - other than the gas tax - to finance the nation's transportation infrastructure, U.S. Secretary of Transportation Mary E. Peters said today.

"By driving less and using more fuel-efficient vehicles, Americans are showing us that the highways of tomorrow cannot be supported solely by the federal gas tax," Secretary Peters said. "We must embrace more sustainable funding sources for highways and bridges through more sustainable and effective ways such as congestion pricing and private activity bonds."

"We need to acknowledge that the supply of cheap oil is nearing its end. Despite short-term fluctuations like the recent price dip, all the evidence shows that supply cannot keep up with demand any longer and a serious effort needs to be made to rapidly adapt our economy to a world without cheap oil.

"We need to stop looking for someone to blame and invest now in more sustainable forms of mobility.

OIL WAS FIRST discovered in the Middle East 100 years ago in May by British explorer, George Reynolds. Now there’s talk the world’s oil will be exhausted in only 40 years’ time. That’s why, say some analysts, the days of cheap oil are gone forever.

Probably within the next three years, according to many experts using a variety of forecasting techniques, the annual output of oil will begin to fall inexorably as old wells dry up faster than new ones can be brought on stream.

Moreover, the amount of oil available for importing countries such as South Africa will shrink even sooner and faster than total world production, since domestic consumption of oil is growing rapidly in most oil exporting countries.

The stark implication is that South Africans will face further oil price spikes and, before long, actual shortages.

High schools and colleges are steering students away from cars to save money on gas, save the environment and promote physical fitness.

This fall, Ripon College in Ripon, Wis., is offering freshmen free mountain bikes, helmets and locks in exchange for a promise not to bring a car to campus. The $300-per-student cost is funded by private donations.

Fuel consumption of new vehicles could be reduced by 30-50 percent by 2035, according to an analysis by MIT. Total US fuel use for vehicles could be cut to year 2000 levels, with greenhouse gas emissions cut by almost as much, the study finds.

DETROIT — Although there's a growing trend among automakers to recommend that drivers pump premium into their cars, Ford (F) and General Motors (GM) are quietly touting the fact that some of their luxury models take regular gas.

Ford Motor's 2009 Lincoln MKS and General Motors' Cadillac CTS were both engineered to run just as well on regular-grade fuel as the high-octane stuff. By contrast, automakers recommend premium gas for nearly 62% of new vehicles on the market, up from 47% of models in 2002, according to Kelley Blue Book.

The pullback is vindication for analysts who for months have been saying that oil prices had entered bubble territory on a mix of financial speculation, worries about a military attack on Iran and rapidly increasing Asian demand. With hefty new supplies hitting the global market from Saudi Arabia, Libya and even Iraq, those analysts say, oil is likely to fall below $100 soon.

"This fall is a reaction to overshooting over the past couple of months," said Daniel Ahn of Lehman Brothers, which has issued several reports suggesting oil prices were unjustifiably high. "The fundamentals of new supplies suggest prices will be in double digits."

Saudi Arabia apparently hit its target of 9.7 million barrels a day in July, silencing skeptics who suggested the kingdom was running out of crude. The Saudis were pumping 8.5 million barrels a day this time last year, said oil-markets analyst George Littell with Groppe, Long & Littell in Houston, as they anticipated increases in non-OPEC production that failed to come through.

"Oil prices continue to come down but it's unclear what will happen with the prices," said Kupfer while meeting with representatives of Brazil's ethanol and automobile industry at the American Chamber of Commerce in Sao Paulo.

"But at the same time, U.S. citizens are making decisions that will carry forward regardless of how fuel prices fluctuate," he told journalists.

The commodity price boom is fizzling fast, a development that could ease inflation fears and lead to some relief for consumers at the pump, in grocery aisles and at the jewelers.

After skyrocketing earlier this year, prices for a wide variety of commodities, including oil, corn, wheat and gold, have fallen drastically in recent weeks, thanks to declining demand, a strengthening dollar and emerging signs of weakness in the global economy.

British families could find themselves subsidising households in France after the French Government ordered a 2 per cent cap on electricity price increases yesterday.

EDF, which supplies homes on both sides of the Channel, raised its prices to British customers by 22 per cent only two weeks ago. It also put up its charges for gas by 17 per cent - but it will not be allowed to increase French prices by more than 5 per cent.

UK oil exports have collapsed to zero in eight years, helping to push up global oil prices. At the same time we have started to import gas, just as international competition takes off. That same international competition is driving up coal prices too.

Britain is, as you say, "a country that still sources 70% of its gas at home". But that figure is declining at an accelerating rate, now falling 10% per year, and by 2020 80% of our domestic gas production will be gone (government and industry agree on this).

US weather experts raised their predictions for this year's Atlantic hurricane season on Tuesday, warning that warmer waters could whip up 17 tropical storms including nine that will grow into hurricanes.

The Colorado State University hurricane team added that five of the storms will mushroom into powerful hurricanes that carry winds of 179 kilometers (111 miles) per hour and higher.

JERUSALEM - Israel is building up its strike capabilities amid growing anxiety over Iran's nuclear ambitions and appears confident that a military attack would cripple Tehran's atomic program, even if it can't destroy it.

Such talk could be more threat than reality. However, Iran's refusal to accept Western conditions is worrying Israel as is the perception that Washington now prefers diplomacy over confrontation with Tehran.

The timing is extraordinarily appropriate, and not just because energy is the campaign issue of the week. The wave of Republican mockery currently assaulting Barack Obama's recommendation that Americans properly inflate their tires flows squarely within the tradition of scorn and derision that conservatives have heaped on Carter for decades -- in part because of his call for conservation and sacrifice in 1977.

Our civilization is fast approaching a tipping point. Humans will need to make the transition from nonrenewable fossil fuels as the primary source of our energy to renewable energy sources that will allow us to flourish into the future. Failure to make that transformation will doom us to the endless political machinations and economic conflicts that have plagued civilization for the last half-millennium.

We need new technologies to be sure, but without evolved political and economic systems, we cannot become what we must. And what is that? A Type 1 civilization. Let me explain.

HAVANA (Reuters) - Following denunciations of the use of food for fuel by former Cuban leader Fidel Castro, a Cuban official said on Wednesday the Caribbean island is modernizing its sugar industry but that plans to increase ethanol production have been scaled back.

Environmentalists say today's supercars, with huge engines pumping out up to three times as much carbon dioxide (CO2) as the average vehicle, have no place in a world struggling to rein in climate change.

But Lamborghini and its rivals argue that theirs is a rare art that needs protecting, blending timeless European design elements with cutting-edge technologies that themselves can help save the planet.

(ENS) - In the near future, large California cities can expect more frequent heat waves because of climate change, warn scientists at universities in California and Texas.

This could mean increased electricity demand to run air conditioners in the densely populated state, raising the risk of power shortages during heat waves, said Norman Miller, an earth scientist at Lawrence Berkeley National Laboratory and geography professor at the University of California, Berkeley, and Katharine Hayhoe, a climate researcher at Texas Tech University.

If the electricity to run those air conditioners is generated using fossil fuels, this also could mean even more emissions of the heat-trapping gas carbon dioxide that causes climate change.

Unfortunately, Professor Bob Watson is not speaking out of turn in telling the world to prepare for four degrees of global warming. "Mitigate for two degrees; adapt for four" has long been the catchphrase among climate negotiators and campaigners. Translated, that means: try to reduce emissions to stay below two degrees of warming, but also prepare for the worst.

When Maritime Road Development Corp. general manager Ross Mathers decided to hire engineer Peter Corbyn of GreenNexxian to conduct an energy audit, he didn't want efficiency to stop at the office door.

After learning about ways to curb energy waste at work, Mathers decided to co-foot the bill with some help from Efficiency New Brunswick so the company's 70 employees could get free home energy audits.

"If your employees are energy conscious at home, they'll probably do the same at work," he said.

Aug. 7 (Bloomberg) -- Norway's oil production peaked in 2001 and exports are likely to end by 2030, Norwegian business Web site E24 reported, citing a study by Professor Kjell Aleklett at Uppsala University in Sweden.

Production at larger oil fields in Norway has decreased by 13 percent a year, while annual output at other fields has slumped 40 percent, a rate of decline that's likely to accelerate, Aleklett told E24.

Production should have been limited at 1 million to 2 million barrels of oil a day in 2001, instead of the 3.6 million barrels a day that was produced, Aleklett said, according to E24. This would have extended production to 2050, E24 reported.

In 2001, the Norwegian oil production has reached the top, and began to decline. Now there's nothing you can do to stop the decline, says a professor at Uppsala University, Kjell Aleklett, to E24. He, together with colleagues mapped the Norwegian oil production and believes Norway's oljefremtid is bleak.

Already in 2030, it is uncertain whether Norway has oil to spare for export after their own consumption is supplied.

Professor of Economics at NHH, Rögnvaldur Hannesson, is not agreed in Swedish dramatic representation of the situation.

Our middle case for Norway has them approaching zero net oil exports is around 2025.

Regarding the Saudi article linked up top, note that there was no mention of: (1) Net Oil Exports; (2) The annual rate of production for 2008, which will almost certainly be below their 2005 rate; (3) A monthly production rate of 9.7 mbpd, if accurate, would only be about 100,000 bpd above their peak 2005 monthly rate. It would appear that we will find out in 2009 if 2005 was the final annual peak for Saudi Arabia, but I estimate that if they wanted, in 2009, to match their 2005 net export rate, they would have to boost their 2009 total liquids production to about 11.8 mbpd, versus 11.1 mbpd in 2005 (2005 C+C average annual rate was 9.6 mbpd).

BTW, if anyone is interested, the Dallas Morning News is sponsoring a discussion of "The Long Emergency" by JHK:

I mentioned a couple of days ago (in the Peak Caviar thread) that I developed a rather simple way to model oil production until 2015. While the names and titles are in Hungarian, numbers are numbers so I guess you guys will easily understand it. Anyway: In Hungarian 'mennyiseg' means quantity, 'atlag' is average, 'szazalek' is percentage, 'novekmeny' is growth and 'valtozas' is change. Netto is net. But I'm sure most of you can figure this out, given the numbers are telling.

Oh, and 'előrejelzes' is projection. :-)

So. To make a long story short: 60 mbpd by 2015 (C&C)

I’ll try to give you a very brief summary as follows. The model is a fairly simple one. It states the following:

We can also calculate DR for 2007-2008 using H1 (Q1+Q2) figures. We arrive at this:

Once we have depletion rates (DR) for the previous years we can calculate a moving average, using 1 year, 2 years and 3 years, respectively. They culminate to the same point: a depletion rate of 5.7% for 2008.

After taking a close look at all this, we can assume the depletion rate further increasing, based on more deepwater wells, giant fields maturing, etc. In the model DR rises gradually to 8.5% by the year 2015.

Now, if we investigate the change in the megaprojects numbers between December 2007 and June 2008 (wikipedia page), and we couple that with these data from Exxon below

We can calculate how much oil will really come from the megaprojects. This projection looks like this, the black line representing the most likely scenario:

By putting all these numbers (DR, megaprojects) and the equations above into a single table, we get this table and graphs (the latter graph from 2003 to 2015):

So we get a production of 60 mbpd in 2015. I don’t know how much in accordance it is with other projections, but this is mine anyway. Putting All Liquids numbers into another table and by drawing another graph here are the all liquids values.

So this is the model in short. Should there be any questions, I can answer them later today. Take care.

Note: negative depletion comes from the fact that megaprojects are incremental whereas depletion is not. In case you do it on a monthly basis there is npo negative sign to it.

Note#2: I have to go out soon. I'll be back at cca. 2PM Eastern Time (in case there are any questions).

Does this involve assuming that any megaproject that could come on stream by 2015 must have been announced by now? That seems reasonable given the time required but has anyone attempted to tabulate the time between announcements and operation in past projects?
Also did you enter an adjustment for date slippage or are you using the nominal dates?

In fact I was assuming that there may be delays y.o.y but everything that is announced will be produced by 2015 -- this year or another. If I use the numbers from original megaprojects data (wiki page) and the same model and depletion rate, I arrive at a rather alarming result.

I'll be doing that later this week. (Probably in 2-3 days' time.) I'm working for an energy security company in my country that I established with a fairly big (by Hungarian measures 'big') firm.

At the moment we are trying to get a few really BIG projects going, both profit and non-profit oriented.

I needed lots of numbers for the respective plans, and after having read for 2 years I decided to come up with some easy to understand but (in my opinion at least) unique approches.

So to answer your question: I can come up with my version of net exports in a few days1 time. I can't tell you exactly when. Soon enough.

BTW, in case any of you guys speak fluent Hungarian, I'm also running a blog under the handle Yspadden Penkaur. You may find more detailed analyses there (even though I'm not posting everything I know/calculate.

Here is a direct link to one of the graphs. Can you see it if you click on it?

If not, your network or ISP may be blocking it for one reason or another. Blogs are often blocked by corporate firewalls. Foreign sites maybe blocked as well, for security reasons (this one appears to be in Hungary).

I should point out that in our UKlish language, eastender means someone living in or from the East side of London.
Looking at your final graph I notice that there's no decline for the next 2-3 years. Can you confidently assure us we can relax a little, or will things look more immediately cliffhanging once you factor in the export aspect plus increasing consumption from China et al.?

Thank you eastender I've bookmarked your blog and will be sending it to some family members who currently happen to be vacationing on the shores of lake Balaton and still think I'm really depressing to be around because of my views on the consequences of Peak Oil. At least this way they have at least one other example of these crazy views in a language they can understand :-)

It would be interesting to see this done for each major producing region then summed.
The way its done it can be broken out into regional projections and summed.

The reason is at least from my perspective over the short term the key issue is decline of small field production primarly Non-OPEC with a lot in the US.

My approach is quite similar but with a twist. What I do is take new projects coming on line and map them as replacements for existing fields. So you can take the mega projects and map them to existing super giant fields and you will see they can no longer replace the existing super giants. This gives the large field decline rate.

Next you take all the smaller fields and smaller projects and start doing the same sort of mapping basically the same as presented here but with the addition that small field production lifetimes are short 5-20 years with steep declines 25% as they approach the end of their lifetimes.

In the small field case its practically a replacement issue every 5 years or so you have to put a new small field into production. If you cannot then these fields decline with no replacement.

Now of course I don't have the data on all the small projects but we do have discovery curves and WHT dispersive discovery model so we know that discovery is well in the past. In addition we have facts such as small fields are only economic on land and in shallow water. Your not going to drill a deep sea small field.

In the US now most of the drilling rigs are devoted to gas not oil. Small field development is also generally driven by smaller companies drilling just for profit so your not going to get a lot of small field drilling in regions controlled by government oil companies they simply don't produce much tax revenue. You get some but without a healthy incentive we won't see a lot of small field drilling esp in inhospitable regions such as Siberia.

Finally of course its only economic to produce these fields if they have access to infrastructure to get the oil to market.

This all adds up to small field development being restricted to shallow offshore regions and land in fairly mature provinces with infrastructure and the right political environment.

So you start googling around and basically the net result even though actually finding the real projects is difficult is that no way we have even close to the number of new projects needed to come on line to replace our current small field production. So by adding the concept of mapping new projects to declining fields and doing the same sort of analysis presented here one finds that short term whats probably going to happen is we will see a very steep initial decline in overall production as these small fields hit the end of their major productive life span without replacement. The majority of these fields actually have life spans of less than ten years. Next almost all the models predicted peak production later about 2010 the current plateau can be explained by assuming that a number of small projects where accelerated as the price of oil increased and more infield drilling was done to increase the depletion rate. In addition of course to spare capacity coming online. But regardless once replacement rates drop low enough then your production rate is dropping inline with the rate these fields decline without replacement.

As and example lets say at year zero you bring 100 small fields online and at year 4 you bring 10 small fields online. At year 5 you have 100 small fields in decline at say 25-50% of production and only 10 new field. Your aggregate decline rate is 45%. Just to keep it simple if you assume they go to zero in two years then you have a 90% decline rate in production after 7 years.

Thats the real problem we face. The decline of the super giants prevents production gains from mega projects but the real production declines short term are from swarms of small fields going into decline without replacement.

Yes, I read your earlier posts on the subject. (And most of your other posts as well.) In fact, I'd love to see your numbers. I think your idea is unique and I give it much credit.

As for doing my model with regions... sure. If someone can hook me up... I don't have the historical data for any given region (outside the US [doe.gov]). As I said: I'm no oil geologist.

In fact, I'm working in a different field: one knowing the data... what do we do know? That's my area of interest. And the more models and results I can incorporate into my views on this phenomenon the better. My view may not be that bad... but it still is only one view.

I won't speak for memmel (though I'm sure it would be great to work with him), but I can do that, sure. However, I think I should finalize the export model (relying heavily on the excellent work from westexas/Khebab, but with a twist)

They used to produce in the shallow gulf have moved to deep water. They have 4 plays in production with the last a NG play. On there site you don't have any indication of a significant new find to replace the current production.

I urge you to read their reports. Reserves where primarily obtained through acquisitions. Shale Gas plays provide a lot of their underlying reserves. This company is almost a perfect snapshot of the current state of affairs in the US.

Outside of a few deep water GOM wells what you don't see is a lot of oil development. This means that for them at least basically none of the oil wells they have developed will be replaced by new production.

How to capture this situation ? The GOM is well documented but where or how to collect the data.

1.) Scour the drilling records for Texas and Louisiana to see how many drilling permits where issued each year ? This is a question for people that are in the industry I'm sure every single well needs a permit so where or how do you get the data.

The US has about 500,000 oil wells. Lets be generous and give all of them a production life time of 20 years starting today. This means to replace all of these wells in the next 20 years requires us to drill 25,000 wells a year.

I include it because it gives info on where to get well completion data.

WASHINGTON – U.S. oil and natural gas drilling estimates for 2006 show that activity remains robust with nearly twice the level of activity recorded during the lows of the early to mid-1990s, API said.

According to API’s 2006 Quarterly Well Completion Report: Fourth Quarter, a 21-year high estimated 49,375 oil wells, natural gas wells and dry holes were completed in 2006. The fourth quarter’s estimated 12,439 completions were the highest since first quarter 1986.

In 2006, natural gas remains the main driver of the US E&P industry. An estimated all-time high of 29,356 natural gas wells were completed in 2006─an estimated 7,482 of those in the fourth quarter, an all-time quarter high for natural gas drilling activity in the U.S.

API’s estimates show that the resurgence in oil well completion activity that began in 2000 continued into 2006. At 15,346 estimated wells, 2006 oil well completion activity exceeded that of every year in this decade and every year in the 1990’s.

In 2006, exploratory oil well estimates rose for the fourth straight year to 932─a 20-year high. The fourth quarter estimate of 301 wells was the highest since first quarter 1986.

API also reported that total estimated footage drilled in 2006 was the highest in more than two decades. According to API estimates, some 289,959,000 feet was drilled in 2006 and 74,439,000 feet was drilled in the fourth quarter alone.

The report is also available from Jeff Obermiller at 202-682-8508 or through API’s Internet-based on-line services, ACCESS* API or API DATA. For information, contact ACCESS* API or API DATA at (202) 682-8511.

A couple of notes even with my generous estimate for oil production in the US we did not complete enough wells in 2006 to replace existing production. Even assuming that each of the 300 exploratory wells resulted in 10 or so production wells new production possibilities are negligible.

Now lets consider reality a bit no way every single well currently in production in the US will last for twenty years into the future most are much older then this in fact the majority of US oil wells are approaching the end of their natural life times.

Now what I cannot seem to find is near shore GOM production broken out after 2006.
Deep water production is making up for overall decline in the GOM at the moment which means 2007 but what happened in the shallow GOM in 2007 and 2008 ???

The numbers above show crude oil in the GOM produced from < 200M wells dropping at 20-30% a year.

So anyway to close this we have tantalizing evidence that the US would probably have to drill more like 50-100k new wells to overcome decline from our aging existing wells and that the number of new fields to develop is very small. Deep water GOM production briefly covered what seems to be the start of a steep decline in production rates from mature provinces but this is in my opinion just a quirk of us moving to deep water when no further prospects where available internally. Going forward we have and unknown but large number of wells that will go into decline in the US over the next few years with no chances to replace them.

If I'm right the total number of producing wells will now begin to decline rapidly from the historical average of around 500,000.

Whats missing is the ages of each of these wells. Its possible to figure this out from the taxes paid for example if you had the data since the reserves are discounted based on age.

Considering we are 8 months into 2008 things are not looking that good.

West Texas is probably correct that problems with imports are causing issues with gulf coast refineries but it also seems that domestic production in the GOM is starting to falter as predicted. NG production in the GOM is even more alarming than oil.

Anyway enough on this :)

The data looks like it might exist. You can readily infer the collapse of shallow water NG and oil production from graphs like this.

Good essay, spoiled by a confusion of terminology. You should distinguish clearly between depletion and decline.

Depletion is the reduction in remaining reserves due to production. It is always relative to pre-existing reserves - there is no such thing as "negative depletion". In the oil business this word is used in a qualitative sense to refer to the reduction in remaining reserves over time as they are produced. A "depletion plan" is the master lifetime operating plan for an oilfield, and accounts for everything that will be done to get the oil (or gas) to market, together with options for future reserves increases and consequent life extension. I haven't heard the word used quantitatively in over 20 years in the biz, though I suppose you could say "depletion of X million barrels per year" if you wanted to.

Decline is the immediate fractional reduction in flowrate per unit time, typically expressed as a percentage per month or per year. There are different functional forms of decline (exponential, parabolic, hyperbolic) - giving different shapes of the flowrate vs. time curve late in field life. But that doesn't matter as much as distinguishing it from depletion. As far as I can tell, your essay says "depletion" everywhere it should say "decline". You are far from being the only person on TOD who makes this mistake.

(As an aside, a field in pure exponential decline loses the same percentage of production per year as reserves, modulo the economic limit. But a field on plateau (see below) can have lots of depletion with precisely zero decline.)

If you want to refine your definitions further, you could distinguish between decline of potential and constrained production.

Potential production, also referred to as "well potential", is what the field could produce with all production wells open simultaneously with no limits on separation, processing, export or market capacity, normally against a stated wellhead pressure. Potential per well starts to decline as soon as you start production; field potential starts to decline when you stop drilling wells, or when the potential decline of existing wells (due to reduced reservoir pressure and/or increased watercut or GOR) exceeds your ability to drill new ones.

Constrained production is limited by "topsides", as mentioned above. It doesn't start to decline until several years after field startup, when potential oil production falls below plant capacity, or when gas or water production potential exceed the rating of the bits of the plant that deal with those fluids. This is what most petroleum engineers mean by "decline".

At the moment the world gets most of its oil from old fields which are declining, plus a small cohort of young fields that have not yet started to decline.

I could add a few paragraphs about the hoops we have to jump through to estimate decline in fields with an active drilling and workover program, but this short reply is already way too long.

You are right - but I do know the difference between depletion and decline. However, these models were like 25 pages long in Hungarian but I only collected a few graphs, so that I can give you guys an excerpt.

But you ARE right: I may have used the term decline instead of depletion. I have an excuse however: I'm no oil geologist. :-) I have a training in medicine and economy. I studied lots of science but geology was not one of them. (Physics, biophysics, [molecilar] biology and [bio]chemistry I know something about though. But it's besides the point.

I think you are right about the wording. However, I also think the numbers are correct. As for this to become an 'essay'... could have been better, agreed. It was not intended to be one. (Not this version at least.) It was just some results I got. Painfuly... I have a strong feeling I got the end result right.

I made the calculations first (with historical data) and I looked up the real data only afterwards. I was within a 1% range...

No biggie - most folk probably wouldn't notice, but it grates on the sensibilities of a specialist audience. Imagine reading a medical paper or newspaper report in which the word respiration was replaced throughout by breath. You wouldn't get to the end, no matter how good the thing was. And maybe one day you'll be trying to influence a specialist. Aren't the words different in Magyar?

I'm a big fan of your country's mathematicians by the way - Neumann, Polya and Erdos spring to mind, Teller maybe not so much. No diacritics on this keyboard, alas. And have you ever read any of Tibor Fischer's (or should that be Fischer Tibor's?) novels? Under The Frog is particularly recommended - life in Budapest between 1944 and late 1956, as lived by a semi-fictionalized version of the author's father, Gyuri.

Yes, I sure know their names and *some* of their work. I certainly do not understand most of it, even though I studied *some* math the majority of their equations are for specialists. I know calculus and I can solve a few more or less difficult equations... but the likes of Neumann or TOD's Web Hubble Telescope just blow me out of the water. :-) I still enjoy reading them, though.

BTW, Neumann is more than a little bit discredited in the US as far as his work on ENIAC is concerned. And another Hungarian you may know is Rubik with the Magic Cube (or Charles Simonyi, the father of Excel.)

I'm not sure I understand your depletion. You include megaprojects additions (historical from which year?) in them? Also, how do you define M? Additions from megaprojects for which year?

Why not calculate decline (and decline rate) from current existing fields separately and then add new projects (megaprojects and some statistical aggregate for the rest) on top of those?

And shouldn't the term be (production rate) decline, not (reserve) depletion?

Other than that, I like the simplicity, but I would be careful about accuracy. My heuristic guess is based on publicly available information that the oil industry is flying with a fairly short visibility into the future. That is, megaprojects data may have significant downside risk (unsure about upside - certainly not much change within a 5 year horizon, I'd guess).

As far as megaprojects are concerned: I used the wiki page back to 2001-2002 and the projections there 'til 2020. I am no oil geologist I cannot be a good judge of these numbers. If those numbers are not correct, my model fails badly. I assumed the numbers to be correct.

As for the model itself: it is very simple. I know. But sometimes simplicity works well. (See Rapaport and TFT [tit for tat])

I know top-down models. I know bottom-up models. I read Hubbert linearization. I read Monte-Carlo. I (think I) understand this stuff. However, it made zero sense to do Campbell's, Bakhtiari's, ace's or Khebab's equations all over again. I'm sure they know their way with numbers.

I wanted to do something totally different just to see what results I get. I know this is not a scientific paper. :-) I don't have the training in geology to produce one. This is just a different approach.

It gives some results... and interestingly enough, the results are almost 100% coprrect if you compare them to historical data. So I thought it might be useful.

Another advantage of calculating things like this is that it's rather easy to understand even for someone who is not all that much familiar with the details of Khursaniyah and Sakhalin II.

On the other hand, I DO know that models from Khebab or ace have more scientific value. The way it should be. They are experts. I am not. I'm a mere layman trying to figure out some things. (Though I'm not totally lost with numbers.)

It could well have been 3% in 1999. It really depends on which fields you exploit (more) in a given year. E.g.: in 1999 the North Sea was a bigger chunk of the total, and this being a deepwater field it could well have had an effect on depletion.

But the model does nothing with individual wells. It takes only the aggregate into account. I opted to stop at 2001-2002, but I could go back if I dig up some more historical data.

Did it help? Not really. Given that fields have been in production for a hundred years it is impossible that decline was at zero. The US, in aggregate has been in decline for 38 years, right? There must be a decline rate for existing fields regardless of new production. Whether the overall rate is positive or negative is a different issue. I don't know if this will affect your outcomes since you are looking at future production, not past, but anything that is wrong in a model leaves it open to criticism. We all know there are those who will exploit a legitimate critique to paint an entire model as invalid when it isn't, s it is worth the effort, I think, to get the numbers in line with reality.

The model I used works with AGGREGATE decline rates (that are mistermed 'depletion', sorry for that). So what does it mean?

It means that in the year(s) there appear(s) to be a negative number it comes from the fact that enhanced drilling was made (also) in EXISTING fields and not (just) from previously announced megaprojects.

I know this is the case in every year more or less -- but in the year you saw the negative number this effect must have been bigger than in other years.

Well, so much for a future of $200With new production coming on-line, crude could be in double-digits soon
Wow! It's BAU. We could soon be seeing oil prices like those of way back in December 2007.

Commodities rush could soon be over

Oil Production will keep Pace with Global Demand

Andrew Leonard's quip in Jimmy Carter- the Peak Oil President pretty well says it all:

The Rush Limbaugh wing of the Republican Party, happily smacking their lips as they've chowed down on Jimmy Carter's legacy for almost three decades, would have us believe that the threats of climate change and peak oil do not exist. To which point, again, one can think of no better response than Barack Obama's.

"I don't understand it ... It's like these guys take pride in being ignorant."

Eventually, there is no option but that the cornucopians will be very wrong and since they haven't prepared for the future other than by buying big houses and inefficient cars they will be in a very bad place.

Unfortunately, the cornucopians will demand that they be bailed out. We should reestablish the civilian conservation corps which would go from house to house insulating and retrofiting McMansions to close off at least half of the existing floor space.

According to Krugman, the present housing crisis was facilitated (among other things) by the ability to make risky loans because they were reasonably sure they will be bailed out by the taxpayer should they fail. Thus far, this is proving fairly accurate as only one I can think of has gone under (indymac).

(Bloomberg) -- A year after losses on U.S. subprime mortgages caused a seizure in credit markets worldwide, European companies are starting to default.

As many as 6 percent to 7 percent of corporate borrowers may fail to pay debts on time in the next year, a 10-fold increase from July, according to Dresdner Kleinwort, a unit of Germany's third-biggest bank. That would be the highest since July 2003, according to data compiled by Moody's Investors Service, straining an already faltering economy.

If speculators drove oil up, who is driving oil down? Despite long term trends, oil will continue to gyrate up and down within a fairly broad range. This is unfortunate for a country and congress that long ago demonstrated mass attention deficit disorder. There is only one person who can fix this problem, a true voice crying in the wilderness -- Paris Hilton. For her next video, I hear she will be showing long term oil production charts in Hungarian, color coordinated of course to show her latest outfit.

Seriously folks, the energy "debate" has spun completely out of control when a bimbo has the most cogent analysis available.

The energy issue is simply too complex to be discussed in the midst of a political campaign. So instead, we have these positively stupid discussions about the efficacy of pumping up your tires.

Main Entry:wretch
Pronunciation:
\ˈrech\
Function:
noun
Etymology:
Middle English wrecche, from Old English wrecca outcast, exile; akin to Old High German hrechjo fugitive, Old English wrecan to drive, drive out — more at wreak
Date:
before 12th century

1 : a miserable person : one who is profoundly unhappy or in great misfortune 2 : a base, despicable, or vile person.

Main Entry:retch
Pronunciation:
\ˈrech, especially British ˈrēch\
Function:
verb
Etymology:
Middle English *rechen to spit, retch, from Old English hrǣcan to spit, hawk; akin to Old Norse hrækja to spit
Date:
circa 1798

From tstreet to T. Boone, everyone is finally beginning to see the REAL crisis. Of course, this is the crisis I have been pointing out for several years, but you know how it is, a prophet is never respected in his own land...:-)

It's true folks, it just plain does NOT matter whether the oil is "out there" or not, it just doesn't matter whether peak is here today or a quarter of a century away, it just doesn't matter how pretty and accurate your depletion charts or your export land models are...the plain truth is "peak money before peak oil". The United States is now hemorrhaging money so fast to purchase oil from abroad all the "peak models", while interesting, simply don't matter.

As a nation we must reduce oil consumption or perish. It's that simple. It doesn't mean we have to reduce energy consumption, although by implication we may, but energy and oil are two different things. The Saudi's have accused the West of discrimination against oil. If we are to survive, we MUST discriminate against oil in the most comprehensive possible way.

As a nation we must reduce oil consumption or perish. It's that simple...

If it's true that the U.S. will bleed to "death" sending money overseas to buy oil, then drastic measures are required. That must mean either we raise the price of oil to the consumer or ration oil imports.

I've suggested that raising the price of oil co the consumer could be accomplished by applying a "user fee" (i.e.,a tax) to transport fuels with the goal of paying for more than half our spending on the military, including our fights in Iraq and Afghanistan. That might result in an increase at the pump of $2 per gallon for gasoline and diesel fuel. To offset the gas tax, the income tax could be reduced for everybody by increasing the amount of the Standard Deduction such that many poor people would not pay any tax.

The other approach is a system of rationing of ALL TRANSPORT FUELS. A key element of a rationing system would be the incorporation of a white market for trading the rationing allocations, thus minimizing the impact of any black market. The rationing approach would not disrupt the economic system as the result of inflationary pressures. And, I think that after Peak Oil, rationing will be the only way to stem the tide of further price increases, which could push inflation toward catastrophic levels.

Any bets as to what approach the U.S. will take in the near future? Ms. Hilton, paging Ms. Hilton, your Hummer lemo is ready for the Inauguration...

The EIA has the monthly average prices out, and July was down by 50¢ over June. Absent a big run up in prices, we are clearly going to see a price decline in August, just like August of last year. I wonder how much of the hype over prices is related to the early November event.

That's today, but "problems" with Iran could get worse tomorrow and turn things around for the Republicans and their drilling strategy.

The McCain drilling strategy is a win for the Republicans, maybe just in time for the November elections.

More drilling will the lower the rate at which the U.S. is increasingly dependent on imported oil in the future.

Drilling for oil in ecologically sensitive areas is a partisan political issue.

The impacts of Peak Oil, however, will soon shift the focus of debate toward how to survive high oil prices, maybe as soon as an attack on Iran.

Increasingly, average Americans will not be able to afford both fuel oil for heating and gasoline for commuting to work (starting in to be felt more in November). When unemployment increases in the ever worsening global recession, a larger and larger percentage of people will not be able to pay for fuel oil to heat their homes. These realities will shock the nation with big increases in home heating bills this winter (starting in November). Oil prices will be higher for the winter of 2009.

In such an environment, the Democrats are making a mistake with their “no drilling” position on this issue. As Peak Oil becomes more widely known as the cause of economic malaise, public attitudes will shift away from environmental concerns and toward more drilling.

Thanks for your insight. I don't mean to be disrespectful but I am confused.

More drilling will the lower the rate at which the U.S. is increasingly dependent on imported oil in the future.

I don't understand how this "more drilling" is going to occur? I don't have the numbers but I can't believe there are very many stacked rigs and crews that would be available to start drilling even if the go ahead were given. Existing rigs seem to be in high utilization right now drilling desperately to maintain current production. If Florida or the East Coast were opened, available deep water rigs would be in competition with GOM, Angola and Brazil for rigs. Would oil companies that could drill use their efforts wild catting new areas at the cost of cutting back on the development programs when they have depleting reserves? If they choose to maintain their current drilling operations and expand to new fields, how would they finance the wild cats? Would the financial institutes be willing to accept more risk in the current financial environment? I seem to remember Jack 2 was the second exploration well, costing $X billion dollars, and a 3rd well was planned. I never heard if despite the find, the field would prove to be economical.

I agree with you, that is why it is stated as "will the lower the rate at which the U.S. is increasingly dependent on imported oil in the future."

Even getting one cup from drilling will do this in the future, maybe 10 years from now. But I would guess that global economic collapse will come and that drilling will never take place. I am the gloomiest of doomers :)

BTW, I have commented on TOD several times that Simmons is pessimistic, as he is aware of the rigs, platforms, and investment.

Finally, this is all superfluous to my point that the Republicans have a better strategy to get votes.

In regards to the commodity rush being over I have some current observations from Australia.
My nephew (mechanic) has been cashing in on scrap metals. On 11 July he was paid $385/ton for car parts but this week the price is down to $280/ton and the yard said prices are falling and will be lower next month.
In my suburb there are now 4 scrap dealers and another dozen I know of within a half hour drive. Lots of people cashing in and on a 2 hour drive to a monastary I only saw a single freshly dumped car and no other metal (even the monastry sent 2 truckloads of scrap to dealers recently and that dumped car will be gone in a few days). 2 years ago the same road would have had maybe 6 cars plus fridges, washing machines etc.
My nephew drove from Sydney to Brisbane (900 miles) and didn't see a single piece of scrap. Everything has been gleaned.
Even farm paddocks have been stripped of old machinery dumped decades ago. If the SHTF there won't be the old horse drawn plows to refurbish as they are being melted.

It might be a good thing that the big Soccer Wagons aren't reselling that easily.. we might end up having to 'beat our Escorts into Ploughshares', if only we are lucky enough to have that option.

I am very concerned about how much scrap metal is leaving the US. Up here in New England, people are scouring the highways and byways to gather up scrapmetal to sell and keep their nostrils above water.. but that scrap has a value way above the daily Per Pound rating that we will have a very hard time repurchasing later on.

We just called a used appliance dealer to see what we could get for a 20 year old range (still in working order) and were quoted 8 cents a pound. If people are scouring the countryside looking for scrap metal, things must really be bad. What's the EROEI on that?!?

The returns are great. That dumped car can be loaded onto a car trailer and sold for minimum $300 for perhaps 3 hours total in driving and $30 petrol.
The 8 cents/lb seems low but if you drive along a few streets during a council clean up it isn't too hard to pick up a few stoves, fridges, bikes, chairs etc and get a ton of metal (.08X 2000= $160, much better than minimum wage).
Only problem is so many people are doing it that most piles contain tree prunings and chipboard furniture so you have to be fast to get the metal.

2nd point is that many old bikes are salvageable for parts. Currently I'm building up a stock of parts to make billycarts (named because they were once pulled by billygoats). The scrap bits give me some cash and the carts will be useful WTSHTF.

That's Rob Gogan. He's associate manager for recycling and waste at Harvard University and he's been overseeing this event for years.

Gogan: They pull out file cabinets, pipes and pumps, springs and sprockets and even nails and screws.

Since January, the price of U.S. scrap steel has doubled, from $350 per ton to $700. That's because in China, Russia and Brazil, booming construction is fueling the demand for scrap steel at the same time as the U.S. dollar is depreciating. So now, recyclers can make more money than ever selling scrap

Last week, I put a fridge and an electric stove in the side yard, since new tenants were going to bring their own, and within a couple hours, a guy on disability had pulled up in his pickup truck, asking to cart them off. (Maine) A lot of increasingly desperate people out there, grasping at straws.

Unfortunately, this article is woefully short of the Big Picture. What else do we expect in our "Now!" society? To discuss energy in terms of a few months is irresponsible, really. Is there new production coming on-line? Yes. Especially this year and next. After that? Not much. There are many of us who are expecting price volatility over the next few years. There is a reason for it: overall scarcity with short-term periods of adequate supply. But the writer should know this if writing on the topic.

What the writer didn't mention was the aforementioned dearth of new production after 2009. This has been talked about by the IEA, EIA, Energy Watch Group, Megaprojects, the Oil Drum dot com, etc. More importantly in the short term are: global net oil exports are dropping (if you import, you have trouble coming); a 5.2 percent gross decline in production from older existing fields (that's 3.5 million barrels a day EACH YEAR we need just to stand still, let alone grow the global economy); a shortage of steel and manpower in the "oil patch" which is causing delays in production starts (that is, not all that new production is going to happen in '08 - '09, which means we have a hard time beating the decline already mentioned); the oil coming from Saudi Arabia is increasingly heavy sour, which there are not enough refineries for just now; Russia, responsible for something on the order of 75% of all non-OPEC gains in production over the last few years is now in decline... shall I go on? One more: The buffer formerly provided between production and consumption (production and production capacity were higher than demand for most of the history of oil production) is gone. It used to [be] millions of barrels. It no longer is. There is little elasticity in supply, demand and price.

Think on it. Do you really think low, low prices are coming? And if they do, do you think they will last long?

In discussing the recent drop in oil prices, Tom Whipple makes the following statement in today's "Peak Oil Notes":

Chinese demand for diesel and gasoline during August, the month of the Olympics, is down by nearly 40 percent which may have more to do with the recent price drops than the decline in US gasoline consumption which seems to have stabilized at around 2.3 percent.

Tom, who used to work for the CIA if memory serves, is pretty careful with his numbers. I assume that the big factor is that they have severely curtailed so much driving, desperately trying to clean the air up.

I couldn't find the article you referenced for context, but from what you posted, I think Whipple's got it wrong on this one.

For one, look at the numbers. "40% decline in gasoline and diesel demand" would be nearly 1.5 million b/d. There's simply no way that there could be a drop of that magnitude in one month, and certainly not from curtailment of consumption around Beijing. China, after all, is a very big country, and we are also moving into prime harvest season (today is the first day of Autumn in the Chinese lunar calendar), which annually bumps up diesel consumption.

Second, China doesn't publish demand figures, and certainly not in advance for the month. The only way to calculate Chinese consumption is from "apparent demand"--refinery output plus net imports. Inventory changes are never reported. This means that "apparent demand" can actually decline in some months, while actual consumption is rising, if it is due to inventory drawdown. China did import a huge amount of diesel (and some gasoline) over the summer.

He may be referring to a 40% drop in imports of diesel and gasoline, since the major trading companies usually announce intentions in advance of what they will be importing a month out. This is the only "leading indicator" there is in the physical oil market, and there have been reports of substantial declines in import demand this month.

Sorry, I couldn't find a link for it either. Peak Oil Notes is an ASPO-USA publication that is e-mailed out to subscribers, but I don't see it on its website. The sentence quoted stands on its own. The previous sentence talks about changes in OPEC production not really explaining the drop.

He many have said something more in the Peak Oil Daily version of his reports. I haven't been reading them.

Probably, also the industry is cutting down on electricity use. As I remember it (too tired to dig up news sources), China has had to rely a lot on diesel power generation due to coal shortages for power generation.

However, due to the very rapid price rise of mid-distillates in the past year, a lot of companies have started cutting back on electricity use, because diesel generation has proven to be too expensive.

These two things (industrial diesel and automotive demand drop) combined with the drop in OECD demand due to the high price and lots of news reporting, could in deed be the reason for the majority of the price drop.

That and the fact that Saudis are apparently pumping 9.7 Mbd now, or at least market has discounted that into their pricing models as a fact.

Order of magnitude, taking half our economic "production" off-line sounds like the right direction to me. I don't know if that's enough to meet 350ppm or Lynas' "two degrees prepare for four" in the headline stories. [deg C]

Probably not, I'd guess.

China's move leads me to observe there is not much difference between a crash and a sensible powerdown/reconfiguration. China in this case can ramp up again. Once we are really sliding down the backside of the curve, we'll also be wanting to invest whatever we can into renewables. How would one marshall any energy for that?

The olympics end August 24th. As I quoted above, they started reducing consumption July 20th. The high oil price of $147.27 was July 11th, so it's pretty hard to say how correlated these are. It seems a bit too early for the price declines to be due entirely to the Olympics, could it be that industries and refinery stocks were throttling back before the deadline? Here's a chart of the oil prices, you can see things really start to slide before the 20th.

Originally I had atributed oil's decline to an increase in production from the KSA. However, coal and natgas both begain declining just before oil did, and I think a demand decline is a far more likely explanation for all fossil fuels dropping in concert. I originally dismissed this, because the OECD demand reduction is about in line with declining net exports, which is what one would expect if the demand reduction were caused by high prices. Accordingly, I didn't think it was enough to explain the drop. I had also suspected Chinese demand was down on account of the Olympics, but I had no idea it was by as much as 40%.

If that's the cause, then one would expect oil prices to head back up once the Chinese start buying again. If they have decent inventories, I suspect it will be a week or two after the games end. If not, it could happen during the games.

A day before the Games, a BBC reading suggested Beijing's air quality was far below World Health Organization (WHO) standards.

It put levels of particulate matter (PM10) at 191 micrograms per cubic metre. This far exceeds the WHO target of 50 micrograms/cubic metre, and also exceeds the WHO target for developing countries of 150 micrograms/cubic metre.

But Mr Rogge praised the Chinese authorities for having done "everything that is feasible and humanly possible to address this situation".

"What they have done is extraordinary," Mr Rogge told reporters.

He said there was "absolutely no danger" to the health of athletes taking part in events that last less than one hour. But he said if the pollution was bad, events which lasted more than that could be shifted or postponed.

For the most part, I don't think the transition to less oil consumption in the US & Canada for the next 5 years will be particularly interesting. Simply put, we are going to become more like the Germans and Japanese are now.

What's more intriguing is what's happening in those countries at the same time. Unfortunately, the language barrier means I have less info than I could wish.

The town council’s decision to require solar-heating panels has thrown Marburg into a vehement debate over the boundaries of ecological good citizenship and led opponents to charge that their genteel town has turned into a “green dictatorship.”

As a result, the Marburg dispute sometimes feels like an argument between the enlightened environmentalists and the really enlightened environmentalists.

Yeah, we're gonna be like Europe and Japan in FIVE YEARS. All that it takes to make Milwaukee attain the population density of Paris (to support mass transit and walking/biking) is for the rest of Wisconsin, all of Minnesota, and all of North and South Dakota to pack up all their belongings (and workplaces) and migrate into the Milwaukee metro region. In five years. No problem, and certainly not "particularly interesting". I nominate YOU to facilitate this process, since you seem to have a vision of how smoothly it will go.

Well, yeah, I can live more like a German just by eating more schnitzel.
I think you do not appreciate the truly spread-out, low density nature of American infrastructure. This represents 60+ years of assuming the price of energy will be low and getting lower. That is assumption is being turned on its head, but the infrastructure is not terribly nimble. The price for new infrastructure within our build up areas is constrained by (1) a growing trade deficit (less money staying at home) and (2) growing inflation (the money that is available doesn't go as far as it used to). Local and state governments are going to be squeezed, just in time for the Baby Boom to retire and rachet up social services expenses. Squeezing through this funnel will be painful, and frankly I don't think that all will make it. IMHO, it will be quite interesting.

You know, in general terms, I'm quite happy enough tossing any non productive baby boomers under the bus (metaphorically speaking). As my retirement is shot because of previous profligancy, I think theirs should be too. Maybe I'm just bitter, :)

Our family flew from Tokyo/Narita Airport for summer vacation on July 27. The airport has always been PACKED at this time, peak travel season (schools get out around July 21 here).

This summer there were no long lines, no crowds, no waiting to get into restaurants. Lots of room to move, actually pleasant in a way.

Then I started thinking about the huge amounts of cement poured, now investments with no or low returns, what happens when the thing gets really empty, then abandoned? It is huge and it is not the only one.

I read that airline ticket sales to Europe and N. America from Japan were down 40% this summer because of the fuel prices making tickets too expensive. At the airport, that 40% quote felt like it was on target.

What about attaining the density of Mulhouse France, (pop 110,900 metro 273,000 (or 237K memory uncertain ATM)). Zero tram lines in 2005, 34 miles by 2011. Six years, not five I am afraid. One can see vineyards and cattle grazing from the windows on some routes.

Wisconsin can at least do the cattle grazing part.

France has announced plans to build 1,500 km of new tram lines in the next decade (and the French take August off). Even before this build-out, they already had trams in (or under construction) in every French town of 100,000 except for five, and trams in some towns smaller than 100K.

Sadly, these are not the same places that they were pre-WWII. The population density in Wisconsin cities (and cities more generally) has declined over the past 60 years (with a few notable exceptions). See:http://soks.wustl.edu/density.pdf

I think that a city's success in 2015 will depend in large part on how closely their density pattern resembles what it was in 1915.

I agree that cities are less dense than they were in 1915, but streetcar and light rail are still viable. I grew up in Wisconsin and now live in Portland and I know that the density of Milwaukee County is significantly greater than the density of Multnomah County (Portland), yet light rail and streetcar have succeeded here. It is more about political will and cooperation than about population densities.

There is nothing really happening here concerning oil consumption that is tightly related to increasing oil prices, maybe with one exception: People switch from heating with oil to other systems (mainly heat pump) even faster now. But the market share of oil heating is below 10% for some years now.

Gas prices? Are up by 50% compared to a few years ago. That hurts barely anyone here. Energy costs make still only 3 precent of an average Swiss budget (which iss 6000$ a month per household). And: We (academic people) mostly get around by train, bus and bike anyway.

Other prices? Food prices? Inflation is at about 3% (up from <1%), but the economy is thriving. So people hope for a pay raise in the same range as inflation.

PS: Let's see what will happen at 200 to 300$/barrel. That will not pass unnoticed even here.

I was glancing through John Michael Greer's article on the Energy Bulletin http://www.energybulletin.net/node/46153 and I agree with his point that a lot of basic useful knowledge is being thrown out, the excuse being that it's "outdated" ... and I'm not referring to the subject of home economics that Mr. Greer is talking about either. As many industries are going hi-tech they discard the old ways of doing things. When the cheap energy that now supports these hi-tech ways goes, so will a lot of knowledge that many people need to just get through a day. Nobody seems to be addressing that point ... the few who do are often taken to be nut-cases.

Summary
Working gas in storage was 2,517 Bcf as of Friday, August 1, 2008, according to EIA estimates. This represents a net increase of 56 Bcf from the previous week. Stocks were 353 Bcf less than last year at this time and 6 Bcf below the 5-year average of 2,523 Bcf. In the East Region, stocks were 19 Bcf above the 5-year average following net injections of 55 Bcf. Stocks in the Producing Region were 24 Bcf below the 5-year average of 769 Bcf a net withdrawal of 7 Bcf. Stocks in the West Region were 1 Bcf below the 5-year average after a net addition of 8 Bcf. At 2,517 Bcf, total working gas is within the 5-year historical range.

It seems that with the additional US NG production we are slowly catching up to last year’s storage level. Over the next 13 weeks we will have to exceed last years storage by 27 billion Cu ft each week to equal last years storage. Not likely.

Plastics break down to lower MW when pan-milled or otherwise reworked, metals pick up tramp elements or carbon, and paper gets darker, and the fibers shorter. None of it is closed loop - it all has to end somewhere. IME you get one more use out of paper or plastics before they're done, and ready for the incinerator.

Do we need to reuse? Of course. Can we "rely primarily" on downcycled materials instead of virgin feedstocks? No.

nelsone-
Yes! "Recycling" of plastic is a myth, as it is "downcycled", and continually to a lower MW.
In reality, most plastic put in recycling bins is not even bothered to be downcycled.
Glass is a push, metals a plus, generally.

I think we need to push for glass to be refilled again, and not just crushed and recast. The useful life of a glass bottle can easily be many, many years, while I think the insistence on having a new, clean container carries a bit of our culturally created confusion between 'Germ Theory' and Cooties.

My nearby Becky's Diner still gets pickles in 1 gallon glass jugs, so I'm gonna start stocking up to keep various food goods in. (Could probably get a decent price for them, if it came to that)

I tried to find info on metal recycling, figuring that it was better than plastic or paper. Best I could find is that steel manufacture for items like automobiles can take a maximum of 20% recycled steel because of its impurities (mainly zinc from galvanized steel). I think aluminum is better, at least for food containers if not for critical applications such as aircraft parts.

Much glass gets crushed as asphalt aggregate.

Unfortunately, 'recycling' is far too much a 'feel good' way of doing things and not enough a substantive way of reducing energy and environmental footprint.

KUWAIT: The government is finalizing its emergency plan this week in order to ensure that the country is protected from foreign dangers in case the regional situation escalates and a war breaks out between Iran and the USA.

An unnamed senior official revealed that the government has learnt that two aircraft carriers are scheduled to arrive in the Gulf and the Red Sea in preparation for the expected war at any time. The official said that this information led the government to accelerate its emergency plan preparations, which include arrangements for protecting all sectors and vital installations.

Govt finalizing war emergency war plan, Kuwait Times, August 07, 2008

Musings about imminent war between Iran and the USA have been background white noise for the past few years.

Because the rule of thumb nation-states have "interests" not morals tends to apply, I have been more than a little skeptical of Iran-US war rumours and rumblings. Can't figure out what or who would benefit (financially, militarily, or ideologically) from missiles being tossed around the Straits of Hormuz.

However, when Kuwait blithely announces that it has a forty day water supply now in storage for such an event, it makes one wonder. Sure would take the spotlight away from Beijing. Considering how much emphasis the Chinese place on "honour" stealing their thunder would be very poor timing.

And IMHO no one has adequately answered to any reasonable satisfaction, what Israel, or the US or Iran would ever gain by a late night pyrotechnic light show in the desert?

The US itself wouldn't gain anything from war with Iran, just like it didn't gain anything from war with Iraq. However, friends of The Shrub in the oil industry could profit from oil shooting to $200+ virtually overnight.

Dubya's friends may benefit short-term from $200/b oil, but they and their children still need to live somewhere.

All the money in the world won't do a damned thing for ya if events really go south.

All the nuclear weapons in the world won't do a damned thing for ya either when the retaliatory response is subterfuge and sabotage.

Would The Shrub risk it all on a short-term gamble with such high stakes? Unlike Iraq, where it was in everyone's interest that the war be contained as quickly as possible, this time I suspect the gloves would come off. Neither Russia nor China would remain passively uninvolved. Nor would Hamas and Hezbollah stay idle closer to Israeli territory.

Moreover methinks Saudi Arabia would be more than a little skittish about such bravado in its backyard. No matter how close the link between the Bush and Saud families, King Abdullah would act in ways best suited for his own self-preservation.

Whether this would be in keeping with State Department calculations, heaven knows.

I can't see it happening. Too many marbles rolling all over the place to have anyone wanting to play the game.

I think all involved should read or reread Barbara Tuchman's "Guns of August" a chilling account of the start of WWI. China, India, Japan and others get oil from Iran. Russia has gas agreements and other business agreements with Iran The SCO Shanghai Cooperation Organization may be a type of mutual defense agreement/ treaty that may come into play. Even bluffs and a "show of power" can have unintended consequences. A $10 trillion Federal deficit and $800 billion trade deficits are not sound foundations upon which to start a war.

Kitty Hawk is in the Pacific
Enterprise is home
Nimitz is ?
Eisenhower is in the Atlantic
Carl Vinson is in dry dock
Roosevelt is in the Atlantic
Lincoln is in the North Arabian Sea
Washington is in San Diego for repairs
Stennis is in its home port
Truman is in the Atlantic
Reagan is in West Pacific

So Nimitz is the only one that's not really accounted for, with the Lincoln roughly on station and a few within a few days steaming.

Seems unlikely the US would attack any time soon, particularly with the games on.

Alan from Big Easy, very astute assessment "These are the most politically important Olympics since 1936."

Hadn't thought of it that way. All the signs are there.

China has a lot riding on its moment of glory in the sun. It's a strange historic moment.

China, with a fifth of humanity and a civilization 3000 years old, is behaving like a debutante at her coming out ball. America, at a few decades over 200, is looking and acting like the old nanny -- worldly and somewhat gauche -- ready to teach the young thing a trick or two.

Except the debutante is asking to drive the car more and more these days. And the nanny is bewildered as to which sheik she'll be able to persuade with her feminine ways to keep filling the tank. She knows the day may come when she'll be overlooked.

What's worse, the upstart is showing off better toys to keep the boys amused.

And IMHO no one has adequately answered to any reasonable satisfaction, what Israel, or the US or Iran would ever gain by a late night pyrotechnic light show in the desert?

If you believe that that world will be ruled in peace and Islam spread throughout the world by the reappearance of the 12th Imam, and that he will appear when the world is is chaos, then starting a fight with the US makes perfect sense.

Disclosure: Before anyone labels me a Muslim hater, I treat all religions with equal disdain.

Airdales take on surviving the future,horses,etc....from the 'Class of 57':

In the DB of 5 August there was some postings regarding use of animal power in the future. Some chimed in who actually used horses both in the present and past.

Those posts were somewhat trashed by others bearing INFOSHIT(as I call it). Derived most likely from intensive googling of the net.

Another decried the Laws of Thermodynamics, and others of 'team' riding,etc...and how horse takes so much land ,expensive feed...yada yada
,yada.....

Firstly this was sucessful in ye oldense dayse...My uncles,grandparents,and myself didn't measure out the Laws of Thermodynamics to decide whether to hitch up the mule team or not.

We did what actaully WORKED!! And I might add what will have to work in the upcoming chaos or dieoff or whatever term is currently in vogue.

Horses and mules derive energy via the sun via grazing. If and a big IF ,,if you do not work them often they do not need grain,such as corn which is what we fed along with some hay. If they are idle they can subsist completely , notice the word completely on grazing.

Water? You create a small pond in their pasture areas or accessible to them.

Now some here are very quick to deride those who take the time to give of their life's experiences by the means of Info gathered via the internet and think they have all the answers. They do not.

They really need to stop with the deriding and open their ears to those who have been there and for goodness sake please quit with quoting the Laws of Thermodynamics.

Its a big waste as it applies to what we did in the past.

For instance: Nitrogen is free. It falls out of the air. Legumes capture it. Horses shit it. We were all in the past making good use of what nature creates or created for us.

The current generation is bonkers on destroying nature and what it offers. They eschew gardening in many cases. They prefer to live in lala-land with their electronic tinkertoys and sit around trying to score on others efforts by derision and mockery.

When someone offers advice or ideas on what worked in the past then you should be happy that they take the time and effort to post (on the DBs only I might add) and take it for what its worth.

In a side note I find it disturbing that some (speculators) make posts asking how they might profit on say....a hurricane or storm heading for the oil rigs! ...I find that distasteful in the extreme. Its done but is rather blatant and tasteless IMO.

I figure those types would find it expedient to even steal the shine outen a dead deer's eyes.

Airdale-who hasn't enough internet access to even waste it on googles anymore...for being to busy on his own lifeboat...so forgive me then for being so terribly upfront on these issues but as always there are those who are 'doing what needs to be done' and there are those who are always pissing on the campfire

Many thanks for taking the time to post. As someone who is about to go out and skid logs in from his woodlot with a big Percheron mare (weather permitting), I am a bit puzzled by the nay-sayers.

I have had a couple of loose ideas (it hardly hurt at all) - one is that people fall into two categories: engineer-think or ecology-think. But I eventually found that doesn't work so neatly: The eco-thinkers need engineering to get stuff done, and the engineer-thinkers need being put into the big-picture and appreciation of long-term consequences that eco-thinking can provide. Or something like that. Like I said, loose ideas.

My other idea is that some people simply hate life, and discount any non-"high"-tech solution to anything. To them, living things are messy, unpredictable, scary, etc. Perhaps a control issue? I don't know, but I do know what works here, on this land, in this climate.

I really like the INFOSHIT label - I will surely use it in future, and always with all-caps :-)

As for the rest of your post, you articulated many of my thoughts quite nicely... thanks again!

I tend to think of there being two types of people; type 1, those that are relying on the system to get them through it and type 2, those that are relying on themselves to get through it.

Type 1 people are thinking about how to patch up the system globally. ie. EV transport, alternate energy, politics, permaculture, all manner of technology, etc. to keep BAU going in some form. They tend to make little or no personal preparations, essentially waiting for the system to be fixed and life support systems to be brought back on-line by whatever means.

Type 2 people are thinking that global life support systems are likely to be unreliable and are looking for ways to voluntarily disconnect so as to become resilient. As there is no need for them to wait for anything or anyone, they tend to get on with it using what's currently available.

Horses are a good example. For type 1, horses cannot support the global system and therefore BAU cannot be sustained "en masse". Replacing tractors or cars with horses doesn't work for the entire system. So the system will crash along with any hope of life support systems being resumed. Its a no go for type 1 as they need the overall system to keep functioning.

For type 2, the horse can provide them with a useful tool that allows resilience to be built into their personal life support system. Whether global agricultural yields can be sustained using horses is of no concern to type 2, nor whether there is enough land, etc to support them globally. It simply isn't an issue for type 2, as long as it works for them, it is good enough.

The global economic system is toast but I can't possibly become enough of a farmer/hunter/blacksmith/doctor/etc in the time remaining to survive on my own.

So I look to for the regional economies that are most likely to survive. Alberta and its nearest neighbours (or possibly Quebec with northern New England) are reasonable for me. Other people's decisions will be different.

Individual survival is as much of a fantasy as BAU. Now is the time to be making a choice because, when TSHTF, you'll be pretty much stuck where you are.

Dear Airdale, I think you misrepresent our debate about horses. And most importantly you here ignore the decisive trumping point. That was that the horses will get shot for people's dinner. So the usefulness of horses will be academic. And experience is only useful so long as conditions don't change. When/if there is a shortage of land for grazing, then horses are liable to reduce food production rather than increase it.

Hmm, in the page source it's in the href tag in unexpurgated form (and that will count). If you're that worried you should create a redirect url. But, anyone who is too immature to access sites with moderate swearing definitely shouldn't be accessing TOD anyway as they are also too young to understand the issues.

Wikipedia has far more rude words and is rarely blocked for that reason.

You're talking a very tiny percentage (0.01% maybe) here. I think you're OTT on this one (only second time I've thought that about TOD and you reversed the previous one). Of course you have to keep needless bad language down but don't get silly.

Next you'll be telling us US libraries burn all books with swear words.

As to being unprofessional. Well you could try changing - But who is currently more professional - TOD or Fox News?

Next you'll be telling us US libraries burn all books with swear words.

No, but it's easy to control what books children read at a library. There are separate sections for kids (and which books are allowed there is often subject to controversy).

Adults and children often share the same computers at the library. Also, they are often set up so anyone walking by can see the screen.

You may think this is OTT, but we've actually had TOD users complain that when someone drops an F-bomb into a thread, the thread disappears for them. They cannot continue to follow the conversation, because the whole page is blocked.

PeakOil.com, once the wild west of peak oil sites, now auto-blocks cuss words.

You realise in a few years time any of us who can actually still post will probably find it really difficult to avoid swear words - and for very good reason. Anyway I'll drop this now. Think TOD will as well given a bit of time...

Leanan has a point. Civil language does enhance civil discussion, debate and conversation.

Expletives serves a function by making it easy to emote and emphasize. The reason "foul language" evokes emotion and emphasis is that it does offend: otherwise these words would carry no social value or meaning. Bodily functions, taboos, genitalia, and sacred names are the usual fare in any given language. And you don't have to listen to George Carlin to figure out what words evoke reaction in English: most are universally known although some are peculiar to locality.

Whenever anyone is learning a new language, the expletives usually come early on.

The problem with expletives is that they are lazy jargon. It doesn't take much thought to cuss like a stevedore.

And besides, respectful language is a sign of good manners and good manners is a form of respect for oneself and others.

While I don't recommend "prudish or priggish" talk, toning down the use of expletives makes common sense and tends to heighten not diminish thoughtful exchange. After all, it takes creativity to express how one really, really feels about something.

Recent experience of intermittent bizarre failures of the TOD website would indicate that this web page itself is at the limits of complexity.

Pulldown View/source to see just how complex HTML web pages such as this have become.

Most people in OECD countries have no idea how something as basic as clean, safe, hot and cold water gets to come out of their taps/faucets.

Post peak-oil, if adequate transport isn't available, the 'oil using' world will need to be redesigned so that specialists are not required to make even the simplest things such as water work correctly and devices will need to be easily repaired, locally, without the components having to come half way around the world.

Airedale is correct about having to go back to how we used to do things, since the inorganic agriculture that mostly feeds us in OECD countries is clearly unsustainable.

Sadly, the human population has been doubling every 40 years or so, ie: things aren't anything like the same as they were even 80 years ago! Logically, the OECD population numbers will have to revert to how it was before FF use (as well as the technology), just like around 4 billion people elsewhere in the world live already!

In the UK blackouts 30 years ago (1978) the supermarkets kept their lights on with generators. I think it's a safe bet they will do the same nowadays, for a few hours at least. After that it will indeed get interesting.

I happened to have a brief conversation with a young woman who's from a small mountain village in Mexico. (pop. 200). She just returned from a two-week trip home to take care of her Grandpa, who'd hurt his leg. The thing is, within 24 hours of her arrival, she got sick from eating unpasteurized cheese and that lasted until about 10 days after her trip was over.

She told me they use mules for transportation, and have electricity, but no bathrooms or outhouses. No organized way to dispose of waste at all. ("It's really bad." quote, unquote.) They collect rainwater in troughs for drinking and bathing.

I didn't get a chance to talk to her for long. I was struck, though, by the contrasts - systems that are "installed" and in use (eg., the availability of electricity) as opposed to ones people seemingly "could do" - *if* they knew how or thought about it (or ?). And also, that the direction of my thinking (eg. "how to...") was not a possible path of connection between us, at least for that short conversation.

Growing up on the farms of my grandparents and many uncles we did not pasteurize anything. We drank the milk warm from the cows. I sometimes squirted it straight into my mouth whilst milking.

We had an outhouse but that was not always handy. We simply went behind a tree and took a leak. In the fields...ditto.

We used mules(cross bred horse and donkey) for transportation.

Was life hard? Not that bad. Work was good for the body.

For those who are not able to survive without indoor plumbing?
Goodbye,adios,so long.

I am extremely healthy for growing up in such conditions. The weak and frail died off soon. We therefore aided the gene pool. Now we see the opposite. A nation of weak,sickly,fat,diseased people who are incapable of real physical labor and receive lots of free money by being so.

Switzerland, which is "above average" when it comes to oil dependence, is not doing enough to prepare for shortages. This is the key finding of a new report.

The Swiss Academy of Engineering Sciences (SATW) said on Thursday that oil covered 57 per cent of the country's total energy needs.

The independent umbrella organisation, which brings together experts, institutions and private companies, said Switzerland had to be ready for supply shortages.

One must assume that the maximum global extraction of petroleum – "peak oil" as it has come to be known – will be reached 20 years from now, according to the authors of the SATW report, "Oil shortages and mobility in Switzerland".

BAGHDAD - The U.S. and Iraq are close to a deal under which all American combat troops would leave by October 2010 with remaining U.S. forces gone about three years later, two Iraqi officials said Thursday.

Ilargi: The system is going through a last round of tests. The players feel pretty secure that it’s leak-proof, but they want to be certain.

Once the final tests are done, we’ll see a system emerge into the open that closely resembles the symbiosis of corporate rule and political power advocated by Mussolini: "Fascism should more properly be called corporatism because it is the merger of state and corporate power."

The system controls itself; there is no outside intervention possible after all the leaks are sealed. Hence we see a blank $800 billion check donated by Congress to the Treasury, which will be used to cover gambling losses of the corporations.

The Treasury, in turn, then hires one or more of the main corporations to help it decide how the loot shall be divided among the corporations. It won’t be for saving the share price of Fannie and Freddie.

Thirdly, the financial corporations, united in the Counterparty Risk Management Policy Group, published a report named "The Road to Reform", which examines how best to get rid of the $700+ trillion in derivatives that threatens the existence of the players.

As Washington and Wall Street will soon have become a completely developed two-headed animal, these losses also will be transferred to the public vault. Taking hold of the last large chunk of public money, the pension funds, is the next step the two heads are planning.

And as much as one may hope that Henry Waxman’s investigation of the White House as an active player in bringing down Fannie and Freddie will succeed, the chances are as infinitesimal as the amount of information that returns from a black hole.

Even the positive one "Pending home sales rise.." is actualy bad news when you read it - they are comparing June to May, and seeing 5+% seasonal rise. But compared to last year, there is a 12% decline.

(Washington, DC – August 7, 2008) Following extensive analysis, U.S. Environmental Protection Agency (EPA) Administrator Stephen L. Johnson today announced his decision to deny a request submitted by the State of Texas to reduce the nationwide Renewable Fuels Standard (RFS). As a result, the required total volume of renewable fuels, such as ethanol and biodiesel, mandated by law to be blended into the fuel supply will remain at 9 billion gallons in 2008 and 11.1 billion gallons in 2009.

“After reviewing the facts, it was clear this request did not meet the criteria in the law,” said EPA Administrator Stephen L. Johnson. “The RFS remains an important tool in our ongoing efforts to reduce America’s greenhouse gas emissions and lessen our dependence on foreign oil, in aggressive yet practical ways.”

Current law authorizes EPA to waive the national RFS if the agency determines that the mandated biofuel volumes would cause “severe harm” to the economy or the environment. The agency recognizes that high commodity prices are having economic impacts, but EPA’s extensive analysis of Texas’ request found no compelling evidence that the RFS mandate is causing severe economic harm during the time period specified by Texas.

The Energy Policy Act of 2005 established the RFS program – and included amendments to the Clean Air Act to set strict criteria for RFS-related waivers. RFS nationwide volume mandates were increased in the Energy Independence and Security Act, which was signed into law in December 2007.

EPA conducted detailed analysis, consulted closely with the Departments of Energy and Agriculture, and carefully considered more than 15,000 public comments in response to the Texas request.

This is the first RFS-related waiver request. In a Federal Register notice, EPA is publishing a detailed rationale that will also serve as a framework for any future waiver considerations.

The flimsy logic of the EROEI case against ethanol where unlike forms of energy are compared while disregarding price, form specific characteristics, and utility has to be put to sleep. It is appalling the this argument keeps rising from the dead over and over again and must repeatedly have stakes driven though its heart.

The proper goal of energy policy should be maximizing the utility of the energy resources at hand with emphasis on renewability.

Energy is not all alike and postulating the it is similar to dollar return on dollar invested is a false analogy. EROEI implies the goal of energy policy should to maximize return just as in $RO$I.

Energy exists only in the abstract just as grain exists only in the abstract. Energy is the the name we give to a group of energy forms just like grain is a name we give to corn, oats, beans, wheat etc. which are all forms of grain. The market does not supply energy but only forms of energy and the buyer has to unfortunately choose which form to buy. The same goes for the seller.

If we postulate that the goal of grain policy is to maximize grain it is meaningless since some forms of grain have higher prices, unique characteristics, and more utility than others. If yield is the criteria only corn would be grown which would be a disaster since it is mainly used for animal feed.

The sketchier case that ethanol causes food price increases and starvation in foreign countries is baseless. It is appalling that while high corn prices have increased the supply of pork and beef as animals were killed to avoid further losses, the blame for food price increases is put on ethanol even though it is a small fraction of the liquid fuel used for growing and transporting food.

The EPA's decision is correct. Gov. Perry's request, had it been granted, would have benefited the chicken pluckers and the hog factories no doubt, but at the cost of lost liquid transport fuel.

In a situation where liquid fuel for transport has been rising in price for years it makes no sense to reduce its supply. Better to reduce the supply of energy wasting chicken and hog factories plus the total waste of energy in exporting corn where the added cost of transport half way around the world is added to the loss.

The Abstract side of 'Energy' is that it is the measure of 'it' doing work, and any number of different energy sources and forms can be set up to do the same job, such as pulling a train or powering a factory.. (Coal, Gas, Diesel, NG, Nuclear or Solar Electricity, Ethanol - for a few examples..)

Money is an abstraction, too. I tend to think of it mainly as an abstracted form of stored energy, for that matter. eg, Labor Done, Services Provided, Raw Materials extracted, Stored/Prepared Foodstuffs, Finished Products.. 'energy' inputs and potentials are a core element of their value.

You really seem to have a bug up your butt re: EROIE and ethanol. If it takes more than one energy unit's worth of fossil fuel to make a unit's worth of ethanol, it's a stupid thing to do. How is that flimsy logic? Why not just burn the fossil fuel instead of going through all the trouble of making the ethanol, which is an inferior fuel anyway.

As long as we are throwing out value judgments like what is better, chickens or ethanol, for one example, I can just as easily make the judgment that both should be cut back if the goal is maximization of nutrients. Food, in its vegetable form is a better use of scarce resources than food fed to animals or food fed to ethanol plants. Given the choice, I would rather drive a more efficient car or not drive at all than waste on it on ethanol, chickens, hogs, or cattle.

In any event, short term yield should not be the basis of an agricultural or ecological policy. Rotation of crops into legumes provides a natural source of nitrogen and is better for the long term viability or fertility of the soil. Unless one appeals the law of supply and demand, the diversion of grain to ethanol increases the price of grain. The difficult issue, however, is the precise impact on prices of that diversion. One can argue until the cars come home since there are a variety of factors that influence price.

At least you acknowledge that the chicken and hog producers would have benefited if the decision has gone the other way. It also follows that the chicken and hog consumers would have benefited. Therefore, the vast majority of people would have benefited since the vast majority of people are not vegetarians. It is even arguable that the vegetarians would have benefited if the vegetables that eat have decreased due to the diversion of the relevant land base.

Anyway, it comes down to what one values most. Far be it from you or the other ethanol supporters to necessarily have priority in this regard. Perhaps the subsidies given to the ethanol industry would be better spent in getting people into more efficient automobiles or other incentives to drive less.

With record grain shortages registered last autumn and corn harvests expected to be lighter this year, the EPA may be overlooking the nature of the problem, nor have they proven the valor of their methodology used to try to reduce pollution.

The Poverty Business: Inside U.S. companies' audacious drive to extract more profits from the nation's working poor

Some economists applaud how the spread of credit to the tougher parts of town has raised home- and auto-ownership rates. But others warn that in the long run the development could slow upward mobility. Wages for the working poor have been stagnant for three decades. Meanwhile, their spending has consistently and significantly exceeded their income since the mid-1980s. They are making up the difference by borrowing more. From 1989 through 2004, the total amount owed by households earning $30,000 or less a year has grown 247%, to $691 billion, according to the most recent Federal Reserve data available.

"Having access to credit should be helping low-income individuals," says Nouriel Roubini, an economics professor at New York University's Stern School of Business. "But instead of becoming an opportunity for upward social and economic mobility, it becomes a debt trap for many trying to move up."

"Federal Reserve data show that in relative terms, that debt is getting more expensive. In 1989 households earning $30,000 or less a year paid an average annual interest rate on auto loans that was 16.8% higher than what households earning more than $90,000 a year paid. By 2004 the discrepancy had soared to 56.1%"

Re: the medieval marvel 14th century Hungarian stove: I am amazed how common is the misconception that storing heat somehow saves energy. Yes the masonry in massive stoves soaks up heat and releases it later, but that means less of the heat is released early on. No energy is created or lost. If you want to warm up the house in a hurry you can't. It is nice that the house stays warm for along while (e.g., while you sleep), but on the other hand if the weather warms up unexpectedly you can't "turn off" the warmed-up masonry.

The same fallacy is often mentioned in the context of resistive electric space heaters that have heat-storage mass (e.g. tall radiator types that are filled with oil). The sales pitch always claims that they save energy, which is hogwash IMO.

Also, any other mass in the house (walls, furniture, etc) can and does store heat. My experience with a regular wood stove is that once the whole house is warm then it stays warm for a long while, even as the fire in the stove is allowed to diminish. (If the house is drafty then of course it cools off faster.)

Nevertheless, the owners of masonry stoves claim that they are more efficient, is there any truth to that, and how?

Yes, they are more efficient. They are because of *how* they burn. A wood stove regulates air supplied to the fire to regulate the temperature output. In doing so, a good bit of the combustibles in wood go up the chimney (or on it - as in creosote). A masonry stove burns with unrestricted air flow. That allows the wood to burn at maximum temperature (1800-2000 deg. F). At temps like that, virtually all combustibles are consumed. As long as the baffle chambers are designed properly, most of that high temp heat is absorbed into the masonry mass to be radiated into the space to be heated. There is no smoke when it is burning at full tilt, and very low particulate output - mostly just fly ash.

When it's done right, masonry stoves can have efficiencies in excess of 80%.

I have a friend who built a Russian fireplace (I think the Hungarians stole the concept and renamed it). It was pretty efficient. It got high efficiency, because it would burn wood very rapidly with Oxygen supplied by a blower, so the combustion was more complete than a typical wood stove, which people tend to burn O2 poor, in order to make it last longer. His fireplace could be thought of as a wood furnace, coupled with a large thermal mass. It can also store enough heat to last most of the night. When I had a house with a wood stove, the temperature would easily drop ten degrees while we slept.

My Mom and Dad built two homes with Masonry Stoves, and I'd never want anything less.

With a hard burn of one load of wood (about 2hrs), we'd have a warm core at the center of our house(s) for up to two days in all but the deepest of winter cold (White Mts, Maine). Not only are you improving all the combustion characteristics mentioned by others, but you are also seriously mediating the OVERheating that happens in many wood-heated homes during the burn, where there is sometimes a tendency to open windows a bit and let some fresh air into the swelter.. this doesn't happen with Masonry Heaters, or shouldn't, and so you have much steadier temps in the building, which brings a number of advantages. We had a grand Piano in there, which would have been ravaged by the temp-swings of other setups, or WE'D have been ravaged by the required Burn-schedule. These are like 'Heat-Flywheels' that smooth out the whole Heating Process. Often they are also built with external air intakes, so they don't deplete the 02 in the house.

They are often called 'Russian', 'Finnish' and 'Masonry' stoves, and probably many other names. They're incredible. Splitting and Cutting wood is great, but not splitting and cutting any more than is absolutely necessary. Ours also had oven doors in the upper 'Combustion Chamber', and after a burn you could bake bread, pizza and cook Turkey, etc in there.. but use a loud Timer, since there's nothing to remind you that this big inert thing has food cooking inside, and it's easy to forget..

I have a good friend who is into building masonry stoves like this. My own impression is that they are best in colder climates where one can count on a long cold spell and heat up the thermal mass accordingly. In Western Oregon, one of these stoves would be overkill given that the typical winter night is 40 deg.F and raining with not infrequent warming spells into the 60s.

Well I have used one for about 20 years and it takes less than an hour to get "up to temperature" and when left to burn out at night, is still keeping the house warm in the morning when we get up, even if it went out at around 1 or 2 am. It does not burn a whole lot of wood (less than a cord a month) and the only quibble is that it takes smaller pieces of wood than most stoves. It has a wooden seat around it so that you can sit and lean against the stove during the evening.

LONDON (Reuters) - OPEC oil exports, excluding Angola and Ecuador, will fall by 360,000 barrels per day (bpd) in the four weeks to Aug. 23, an analyst who tracks future flows said on Thursday.

Seaborne crude exports from 11 OPEC members, including Iraq, will fall to 24.46 million bpd from 24.82 million bpd in the four weeks to July 26, British consultancy Oil Movements said in its latest estimate.

LONDON -(Dow Jones)- OPEC crude oil shipments, minus Angola and Ecuador, are projected to increase by 140,000 barrels a day over the four weeks to Aug. 16 as additional barrels from the Persian Gulf and other producers work their way into the market, U.K.-based tanker tracker Oil Movements said Thursday

Shipments from members of the Organization of Petroleum Exporting Countries are expected to rise by 140,000 barrels a day to a total of 24.81 million barrels a day, compared with 24.67 million a day in the previous four-week period to July 19, Oil Movements said.

Isn't that rather a huge fall for a 4-week average in one week? 24.81 to 24.46?

I hear what you're saying - but at first sight it might suggest that oil shipments will drop over 1 million bpd beginning the week ending Aug 23 - no wonder tanker hire rates are falling. Interesting to see if that trend continues in the weeks ahead. In any case I think it also suggests July will be the peak OPEC month, at least in the current run up in reported production.

Add the closure of the 1 mbpd pipeline through Turkey and could this indicate oil price is about to head back up?

The oil tanker tracker firm, Oil Movements, sees a considerable fall off in OPEC exports in late August - due to "overproduction" from OPEC countries. There are significant indications this is mostly due to Saudis scaling back their much proclaimed recent increase in output.

While not indicated below, other industry sources state the incremental increase in Saudi output (500,000 bpd) the last few months is mostly heavy crude. The amount of supply of this type of crude currently exceeds available refinery capacity. However later in the year Reliance of India plans to open a major refinery that can utilize this type of crude. One of the new customers for Reliance is Iran, which lacks refinery capacity.

Anyway, this is the biggest fall off in shipments we've seen since about six months ago.

Aug. 7 (Bloomberg) -- U.S. consumers borrowed more than twice as much as economists forecast in June as the slump in real-estate prices prevented American homeowners from tapping into home-equity lines of credit.

Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion, the Federal Reserve said today in Washington. In May, credit rose by $8.1 billion, previously reported as an increase of $7.8 billion. The Fed's report doesn't cover borrowing secured by real estate.

Consumers are using credit cards and loans to cover expenses as falling home values cause banks to restrict access to home- equity lines. The Bush administration sent out tax rebate checks in the past three months to help support spending, which accounts for more than two-thirds of the economy

Aug. 7 (Bloomberg) -- Deutsche Bank AG will foreclose on the $3.5 billion Cosmopolitan Resort & Casino in Las Vegas after developer Ian Bruce Eichner defaulted on a $760 million loan, two people briefed on the situation said.

Germany's biggest bank weighed selling the complex after Eichner's January default, said the people, who asked not to be named because the discussions are private. Deutsche Bank will take over the Cosmopolitan and is talking with companies including MGM Mirage and Hilton Hotels Corp. to help run its 80,000-square-foot casino, the people said.

Sagging commercial real estate prices, weighed down by record subprime defaults, forced banks to hold projects until prices rise or sell at a loss. The Frankfurt-based bank would oversee an 8.5-acre development with two high-rise towers, three wedding chapels, a sandy beach overlooking the Las Vegas Strip and a deck featuring ``European-style bathing.''

``Deutsche Bank wants to be engaged in banking, not running a casino,'' said Matthew Clark, a London-based analyst at Keefe, Bruyette & Woods. ``They've had to decide between selling the Cosmopolitan into a bad market or holding on for better times.''

---

Casino Revenue Slides

Las Vegas, the heart of the U.S. gaming industry, is reeling from sluggish economic growth and soaring food and fuel costs. The city's casino revenue slid 16 percent in May, the fifth straight monthly decline, according to the Nevada Gaming Commission.

Homo sapiens holds an almost religious faith in science and technology. Many of us have encountered that faith but the naysayers (often engineers who have been properly trained in science) don't really understand how the masses literally trust their lives to technology even when visible warning signs tell them otherwise.

I remain a doomer, not because of technology, but because of the people using the technology, because of the lack of political and social will to recognize the limits of science and technology, and because this mystical faith in technology continues to cause many to ignore the clear warning signs all around us.

James Howard Kunstler was just on the CBS Evening News tonight. It was about "The End of Suburbia." They talked about the increase in urban dwellings and the drop in suburban dwellings. It was a rather short clip but I hope it will be on video so we can all watch it again.

Somy, you noticed that too, huh? She sells a house for HALF OFF instead of trading down the truck? She lived only 30 miles out from the city job, but spent $800 dollars monthly on fuel bill? (!!!)

The CBS piece did point out something interesting though...empty nesters trading out of the homes they raised children in, and moving back to condos or apartments in town, where they can go to shows, plays, museums and galleries and other events. This could be a pretty big trend which will indeed help overstock the market with larger suburban homes. Due to the "birth dearth" young starter families may not be available in numbers needed to replace the aging boomers. However, there is one thing I have seen in our area...lots of new homeowners from the Hispanic population starting families. They still love the whole American idea of home ownership.

The Energy Watch Group believes ... uranium, one of the most commonly found minerals in the world, will reach peak production in 2013.

Does the writer not realize the apparent contradiction in that line? How could that be? Total world consumption is only about 65,000 tons per year.

Is Uranium very energy intensive to mine? Uranium has 2,000,000 times the energy density of oil and, according to Key Deffeyes, concentrations of 10-20 PPM (of which there are about a trillion tons) can be mined with an energy gain of 16 - 32.

Peaking in five years for "one of the most commonly found minerals in the world" that can be mined at very low concentration with still high energy returns? Don't these guys even think about what they are writing?

To me, that reads like it's their own aside ('most commonly found..') couched next to the Energy Watchgroup's position on Uranium peaking. Your consolidating of the sentence helped make it sound the way you heard it.

"According to the Peak Oil Association, the world can't produce enough oil with supply topping out at 85m barrels/day against demand of 87m barrels/day. And the German organisation The Energy Watch Group believes global coal resources will start to deplete by 2025, while uranium, one of the most commonly found minerals in the world, will reach peak production in 2013."

Later in the article, do you know what he means by 'Thermal Uranium'?

But it's not just oil. The world's search for sources of energy is sending all similar commodities into orbit, such as thermal uranium and coal.

It might be an ironic aside, but the story elsewhere does not seem to question the Energy Watch Group conclusion. Anybody who follows this knows that there are two sets of completely contradictory numbers for everything important having to do with nuclear. He might have acknowledged that he was aware of that.

Most likely he meant "Uranium and thermal coal". And again, the spot price of Uranium is now around $50/lb, down from about three times what it was a few years ago. He cannot let the facts get in the way of a compelling theme.

I'm at odds with the above article 5 years after the Northeast electrical blackout. Implicit in his argument is that because we haven't built anything anywhere in the past 5 years, we're still hanging by a thread...and that our transmission system is not designed to carry such large [increased] loads.

First off, our grids are always designed to carry all expected loads. We design to a 1/10 condition (peak loading likely only once every ten years) for all single contingencies and credible double contingencies (loss of a generator, loss of a double circuit transmission line, etc). Reliability criteria mandates this.

Secondly, the root cause of the 2003 outage wasn't a lack of transmission or generation infrastructure, it was due(as is typical with every disturbance) to a combination of factors; in this case, transmission maintenance and generation failures along with computer/MMI failures.

Thirdly, we cannot possibly plan for multiple unrelated contingencies...which is to say, future blackouts are coming regardless, folks. We do not provide 100% reliability. We never could, and we never will. We analyze past events and follow through on mandated recommendations, which is exactly what we are (collectively) doing today. We minimize the risks relative to the costs of ensuring 'adequate' reliability.

NERC has established a whole host of maintenance related criteria in the wake of this blackout to address the root causes. This alone is as valuable as any infrastructure upgrade.

Where I work we have two hydro stations and one gas turbine (aux fired from a diesel generator) that can be used for blackstart, and of course there are blackstart requirements for every operation. I don't know about HVDC; however, you'd still have to have a DC power source. What might that come from? My first thought would be a large diesel prime mover. In any event, as I mentioned we do have (across the grid a lot of) gas turbines that can be blackstarted, so that capability is present.

I don't think most interconnection disturbances will be short (<4 hours), due to the volume of restoration usually required. They can get ugly. Sometimes in the west we separate between high generation islands (the Pacific Northwest) and low islands (California/Arizona), where up north they drop generation and load in the southern island, splitting the interconnection on a controlled basis rather than uncontrolled. In these cases restoration is only a matter of hours.

Although I don't foresee it, if a grim resource future holds that the interconnection is more a liability for regions that have an adequate load and resource balance, you'd find them moving away from the large grid systems in place today for more localized control. A return to consuming electrical energy close to the source.

Iraq will resume searching for oil on Friday for the first time in two decades, the oil ministry said on Thursday, in the hope of finding vast reserves that lay undiscovered because of sanctions and war.

Iraq has 115 billion barrels of proven oil reserves, the third largest in the world, but the government believes the country's actual oil reserves may be three times as high.

Asim Jihad, spokesman for Oil Ministry, said it had trained three teams of geophysicists, geologists and engineers and would kick off exploration in the Gharraf field in Nassiriya in southern Iraq on Friday.

Never forget that 99.99% of people believe/have no reason to doubt that these "mainstream" figures are accurate:

Saudi Arabia is currently ranked first in the world with proven reserves of about 264 billion barrels, followed by Iran with some 137 billion and then Iraq on 115 billion.

Just in case you missed it, it appears we have another war going on in Georgia:

http://www.reuters.com/article/homepageCrisis/idUSL8718565._CH_.2400
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MEGVREKISI, Georgia, Aug 8 (Reuters) - Georgian troops, backed by warplanes, pounded separatist forces on the outskirts of the South Ossetian capital on Friday hours after launching an assault on the breakaway region following a short-lived truce.

Georgian big guns shelled Tskhinvali, where government and separatists envoys had been due to meet for Russia-mediated peace talks later on Friday, and many houses were ablaze.

Russia, main backer of the separatists who have controlled the region since a war in the early 1990s, accused Georgia of treachery and urged the world community to avert "massive bloodshed."
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Pakistan and Kashmir are getting increasingly violent too. Such is life.

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